Rare-earth shortage? Afghans think they can help

KABUL, Afghanistan 
Amid surging demand for rare-earth minerals used in everything from cell phones to gas-saving cars, Afghans are dreaming of cashing in on vast deposits they believe lie beneath their feet.

The problem is that they are in one of the country's most dangerous spots, on the south bank of the Helmand River in southern Afghanistan, where fighting rages in a traditional Taliban stronghold.

That Afghanistan sits on vast mineral wealth has been detailed in several surveys, the most extensive of which were conducted by the Soviets in the 1970s. Mining companies, both Afghan and foreign, already have shown interest, notably in its copper, iron and oil.

Last month, Afghan officials proudly presented what they say is $3 trillion worth of deposits scattered throughout the country, more than triple the initial dollar amount estimated by the U.S. Defense Department last June.

But with poor infrastructure and security that ranges from precarious to downright prohibitive, there is a limit to how much the country can hope for, at least in the medium term.

Among the most exciting right now are the rare earths, with a spat between China and Japan last fall highlighting China's near-monopoly on the minerals.

In 2007 the U.S. Geological Survey estimated 1.4 million metric tons of rare-earth elements lie in southwest Helmand. The Afghan Ministry of Mines says there is more elsewhere in the country, "huge deposits" overall, according to Jalil Jumriani, who deals with policy and promotion at the ministry in Kabul.

The U.S. Defense Department's Task Force for Business and Stability Operations estimates the Khanneshin area in Helmand holds some $89 billion in rare earths and niobium, minerals strategic for high tech and industrial industries.

"This deposit could represent a long-term development opportunity for Helmand province that would create jobs across the spectrum from low-skilled laborers to chemists, physicists and engineers," the task force said in a statement last month.

USGS scientists are analyzing samples taken over the past 18 months from Helmand to determine what exactly is there in the way of the 17 rare-earth minerals.

Jack Medlin, a USGS specialist, said it was too soon to call it "a world-class rare-earths deposit. We're not there yet. We will be there probably by midsummer."

Jumriani said officials were treading cautiously. Once the picture clears and the mining law is overhauled to define investors' rights, Afghanistan will hold a road show to present its rare-earth deposits, possibly this summer in Hong Kong or Singapore.

"We want to take these steps slowly, and we want to make sure that the people in Afghanistan can get the real benefits of this," Jumriani said.

Rare-earth minerals are used in areas as diverse as cell phones, hybrid car batteries, defense industries and wind turbines, and China accounts for 97 percent of production.

China has 30 percent of the world's rare-earth deposits, but the United States, Australia and others stopped mining their own a decade ago because it was cheaper to buy Chinese ores. Several companies now plan to resume production in North America and Australia.

Beijing announced in 2009 that it would reduce rare-earth exports to curb environmental damage and conserve supplies. Manufacturers were alarmed when China temporarily blocked shipments to Japan last year during a dispute over islands claimed by both governments. The Japanese government is discussing creating a rare-earths recycling industry to reduce reliance on imports.

China already has made a hefty investment in Afghan minerals, signing a $3 billion contract to mine copper. But it is not known whether it will seek a stake in Afghanistan's rare earths.

Also, experts caution that it is still unclear whether the Helmand deposits are mineable and can yield a profit. One question needing study is which of the rare-earth minerals are more abundant, the more abundant ones called light rare earths, or the heavy rare earths critical to specific industries. Medlin said old data lean toward the lights, but there are indications heavy rare earths are present too.

A Ministry of Mines report last month indicated the deposit included the rarer type.

"The heavy rare earths in Khanneshin are found only in few locations around the world. This deposit could represent a long-term opportunity for Helmand province, creating jobs and stabilizing the area," a statement said.

"There's been quite a lot of hype about mineral resources in Afghanistan," said Andrew Bloodworth, a mining expert at the British Geological Survey. Afghanistan is unquestionably rich in minerals, he said. "It's a big country with complicated geology, and ... the chances are they're going to have mineral resources which are going to be of interest."

But just having the minerals is not enough. Mines need roads and railroads, no easy proposition in a war-wracked country.

"The question is ... if this is an economic deposit, can you produce rare-earths out of it in two years or five years? And the answer to that is, maybe," Medlin said. He does not expect it to have an impact within five years, but in the longer term it "could have a big impact."

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AP researchers Zhao Liang and Yu Bing and AP Business Writer Joe McDonald contributed to this report from Beijing.